Analyst: Apple’s iPhone 7 is outselling iPhone 8

“Apple Inc’s older iPhone 7 models are outselling the recently launched iPhone 8 ahead of the early November debut of the premium iPhone X, broker KeyBanc Capital Markets said, citing carrier store surveys,” Reuters reports.

“Traditionally, new editions of the iPhone have sold quickly as fans queue for the latest upgrade, but early surveys have added to chatter that the iPhone 8 is not proving as popular as its predecessors,” Reuters reports. “‘Many respondents indicated that a meaningful portion of customers are buying iPhone 7 in lieu of the new iPhone 8, given the lack of significant enhancements in the new phone,’ KeyBanc analyst John Vinh wrote in a client note.”

MacDailyNews Take: KeyBanc analyst John Vinh obviously couldn’t analyze his way out of a wet paper bag.

iPhone 8 offers the A11 Bionic chip, Wireless Qi charging, capacity up to 256GB, True Tone display, Apple’s Neural engine, an embedded M11 motion coprocessor, Portrait Lighting, 24/30/60 fps 4K video recording, Dolby Vision and HDR10 support, and fast-charge capability, to mention ten (10) significant enhancements.

“While iPhone 8 starts from $699 in the United States,” Reuters reports, “iPhone 7 is retailing from $549 after a price cut.”

Read more in the full article here.

MacDailyNews Take: Given that those who are not waiting for iPhone X are much more likely to be price sensitive consumers, it is wholly unsurprising that they are choosing the less expensive option. We expect the iPhone 6/Plus are also selling well downmarket.

26 Comments

  1. I hear you MDN but for his birthday I asked my son which phone did he want:
    iPhone 7 or iPhone 8 just had to be under $700

    iphone 7 at 128 Gig costs $649

    Iphone 8 at 64 Gig costs $699 (there is no 128 Gig option only 64 and 256)

    He picked the 7.

    My son would rather have the storage because of all his music. Yes he has Apple Music, but he likes to keep it on board as streaming is problematic in some places. Camera, processor, screen are all “good enough” according to him.

    1. I bought an iPhone SE 128, because I wanted the extra space, but not a phone too big for my shirt pockets (oh yeah, the headphone jack rocks too). Unless Apple makes an SE 256 that’ll be the last phone I buy for a long time.

        1. I tend to feel the same way I really don’t want to spend my time out and about like so many glued to my phone even when with friends, I am bad enough at home with my iPad and Mac and if I want to do that because I will be out on my own then I take my iPad to do work/social/research/browse or whatever properly.

    2. Your son probably doesn’t know the term “future proofing,” and doesn’t realize that a 7 will lag on the AR and games he’s sure to want to use much sooner.

  2. It doesn’t help that Apple cut out the mid range storage option on the 8’s. 64g to 256g …. really? 128g is perfect and would have provided a lot of people with an actual option for the 8’s that didn’t want to spend up to $949 just to get some livable storage.

    In addition, a lot of people that are willing to spend the money iare probably going to hold out to see what the X looks like in person and what it’s availability is going to be before locking into an 8 or 8plus.

  3. KeyBanc is correct. Morgan Stanley first saw that the iPhone 7 was going to sell better than the iPhone 8 series in a survey recently completed concerning buying preferences this Fall.

    Twenty per cent of respondents said they were going to buy an iPhone X.
    Thirty-nine per cent of respondents said they were going to buy an iPhone 8/iPhone 8 Plus.

    That leaves 41% buying all other models of iPhone this Fall.

    What’s important about that is that historically the percentage buying all other models was only 20% to 25% of total iPhones sold. Why is this shift occurring”. It’s called “Decoy Pricing”. https://seekingalpha.com/article/4112991-apple-decoy-pricing-iphone-x

    The “Decoy” this Fall is the iPhone 8. iPhone buyers not wanting the iPhone X (for whatever reason) will gravitate to the iPhone 7 BECAUSE there isn’t that much PERCEIVED differentiation between it and the iPhone 8.

    Anybody with a background in marketing will understand the concept and how it is implemented.

    Read the article https://seekingalpha.com/article/4112991-apple-decoy-pricing-iphone-x

    1. Boy those finance wizards earned their million dollar bonuses with that astounding insight. How amazing is it that the less expensive product sells more volume? I should be an investment bank VP.

  4. “MacDailyNews Take: KeyBanc analyst John Vinh obviously couldn’t analyze his way out of a wet paper bag.

    iPhone 8 offers the A11 Bionic chip, Wireless Qi charging, capacity up to 256GB, True Tone display, Apple’s Neural engine, an embedded M11 motion coprocessor, Portrait Lighting, 24/30/60 fps 4K video recording, Dolby Vision and HDR10 support, and fast-charge capability, to mention ten (10) significant enhancements.”

    “MacDailyNews Take: Given that those who are not waiting for iPhone X are much more likely to be price sensitive consumers, it is wholly unsurprising that they are choosing the less expensive option. We expect the iPhone 6/6Plus are also selling well downmarket.”

    Is it me, or is MDN taking both sides of the issue?

  5. the points MDN listed are compelling for the price difference but I don’t think most consumers are aware of them. Apple is pretty poor in marketing ‘specs’ (vs. things like lifestyle).

    I notice that big box retailers are also poor at explaining these things, usually they are SOOOOO busy (understaffed stores, at least in my area) until that they don’t explain anything. I believe it’s more profitable for them to sell a bunch of cheaper phones like Androids quickly (“You want a $200 phone? They’re in the plastic packages on the stand, cashier is over there… ” ) then to explain a the advantages of high end phones like the iPhones.

    Sometimes when I shop for Apple products I have to PROMPT them like : “eh there’s actually a Thunderbolt port on the side of that Mac… ” when their ‘Mac guy’ didn’t know what Thunderbolt was.

    In short I believe Apple has to make better efforts explaining their advantages , very few consumers actually watch product launches or follow things like WWDC.

  6. “In short I believe Apple has to make better efforts explaining their advantages , very few consumers actually watch product launches or follow things like WWDC.”

    That’s probably why Apple Stores do so much better per square foot than ANY retailer – worldwide.

  7. Apple should have ditched iphone 7 in the lineup as reported the customer sees no massive significant difference between the 7 and 8 and normally in this scenario a customer will choose the familiar model to the new one.

    Persoanlly I think the iphone lineup is too broad with too many models and this is giving too much choice.

    The glass back on the 7 and better camera just arent complelling enough to make a difference, plus people wanting to upgrade from their 6 are going for the 7 because it’s cheaper and looks identical to the 8 even though its an older model.

    I use a 7 so will never buy the 8, infact when the 8 was announced the first thing I said to my wife was “its exactly the same as the 7 which is cheaper”

    Food for thought…

    1. “I use a 7 so will never buy the 8, in fact when the 8 was announced the first thing I said to my wife was “its exactly the same as the 7 which is cheaper”

      Decoy pricing in action.

      The iPhone 8 has the same guts as the iPhone X (or nearly so). Yet is priced $300 lower. Ergo, Apple isn’t making historical gross margins with it.

      On the other hand, production costs of the iPhone 7 have dropped, enabling lower price points while maintaining gross margins higher than the 8 generates.

  8. After looking everything over I am going to keep my iPhone 6+ and wait until next year. If my 6+ dies before then I will probably go with the iPhone 7+.

    Why?

    I don’t like the glass back. My brother had an iPhone 4 with a glass back. Major issues with durability!

    If the published test results are accurate, The new phones are not as durable as the iPhone 7.

    Wireless charging appears to be a gimmick. You still have an adapter plugged into the wall. The plate actually takes more room on my desk than a charging cable does. What is the advantage?

    The new cameras are nice, however, after dropping my iPhone 6+ three or four times over the past couple years durability is more important.

    1. Re: “Wireless charging appears to be a gimmick. You still have an adapter plugged into the wall. The plate actually takes more room on my desk than a charging cable does. What is the advantage?”

      Could the advantage be the slower charging compared to plugging in? No?

      Maybe it’s the fact that Apple’s misleading customers by allowing it to be called “wireless charging” when it’s actually inductive charging…??? I.e., the device has to be left resting on (touching) an inductive pad while charging – for the entire time it’s charging.

      Slow inductive charging is hardly an advantage in any of the myriad situations you want to use the phone while it’s charging (which is nearly all the time for me).

      Anyway, so not that either… ….hmmm. Must be something else then…. …besides that it looks cool at first glance in an ad…

      [PS – with a multi-device capable pad, I can see the use case for everyday users who get a full charge for a day overnight and who have both a phone and Air Pods to charge – it’s neater, saves a few seconds a day, and avoids a bit of multi-plugging annoyance. So a must for “aspirational” and “lifestyle” customers.]

      1. Glass backs unfortunately can break even in cases.

        My brothers iPhone 4 broke while laying on a flat surface. All of a sudden there was a loud pop and when he picked it and started examining it up pieces of glass started falling to floor.

        Fortunately, Apple after a bit of grumbling came through and fixed the issue free of charge. So kudos to Apple Tech Support for a job well done!

    2. Mmm. I too had a 6+ for over 3 years and loved it… until it started to get too slow for heavy hitter apps, and the battery life was getting on the short side…
      So I picked the 8+ and so far, VERY happy with it!
      Yes, I could have waited for the X – but I picked the “safer” for the following reasons:
      – comfortable with current size, form factor and look and feel.
      – prefer the touch ID, having a real button counts (more physical when I don’t look)
      – having an all screen front scares me: I like to have an area that is NOT screen (nor touch) to rest my fingers.
      – camera is awesome and (almost) as good as the X on the plus, with same portrait software
      – inside specs (cpu/gpu/ram etc..) all the same – and that’s FAST compared to 6, 6s or even 7.
      – for me 64GB is plenty. My 6 never went full, and checking its free mem at the moment of choice was 20GB free, with plenty of apps and music! Plus iOS 11 made half of my (old) apps redundant or expired if 32 bit anyway. Tons of room left!
      – really not a big fan of the top notch for depth sensing – kind of negate the whole slick design for me… and I soOOoo don’t care about face-scanned emojis!
      – I feel the OS isn’t quite mature enough for me, wouldn’t be surprised if a lot of apps out there seem confused by the extra screen space. Makes sense for me to let others “beta test” and I dive in for the iPhoneXs in 10 months when I can upgrade again (yes, I took the apple upgrade plan).
      – wireless charging is NOT a gimmick : loving it. Why? Well for a start I hate the lighting cable: they die on me every other month: it’s infuriating. So less of that. Plus freeing this plug means now I can charge AND listen to music on my headphones at the same time. Picking up and dropping the phone for a call feels so natural onto a pad. Can’t wait to see them everywhere, and have larger multi-pads in one larger device for the family.
      – glass back is fine, phone is always in a gel case anyway.

      In summary – the iPhone 8 rocks! As the price may drop a bit when the X goes out, go and grab one. It’s just the same, but better, and much MUCH faster than a 6.

  9. Not sure if folks remember when the iPhone 4S was released and
    people complained about things as minor as the name not being 5
    in lieu of 4S. Here’s my take on the higher 7 sales:

    – the somewhat similar look (which would be fine with me for the
    next 10 versions if it’s form for function). especially since the 7
    has dual cameras in the plus model.

    – the huge difference in storage options (apps are far larger than
    before since the intro of a 64GB architecture and metal-level coding)

    – the cost difference between storage sizes can be spent on apps.
    $150 is quite a bit of music, apps, and in-app purchases.

    – the average smartphone customer has not the slightest understanding
    of the underpinnings of their tech and thus don’t understand that an
    iPhone 8 could get them an additional 2 (maybe even 3) years of use
    before really needing to replace it

    – listening to others that either: dislike Apple, dislike iOS, dislike
    just the iPhone, or just don’t know what they’re talking about.

    – there folks who didn’t even know that a new iPhone was coming out in Sept
    bcause they don’t follow iPhone cycles and purchased a 7 in the weeks
    leading up to the 8 release.

    That being said, I jumped from 6S Plus to 8 Plus. And would’ve been more than happy to move from 7 to 8.

  10. You have to laugh what sort of enhancements would be meaningful or significant I wonder in what is already becoming a mature sector. As MDN spelled out considering this is not this year’s top end phone it is offering significant improvements that really only lack the bezel-less display. What do they expect inbuilt toaster at the stupid end of expectations or personal transportation at the impossible end I wonder. Hell even Google the epitome of overblown boasts and expectations have said fundamental advances are are difficult to achieve in what is a mature highly developed product.

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